Citi to Sell or Close FCS.

New York -- Citigroup, decimated by billions of dollars in writedowns on subprime assets, has decided to close its warehouse lending division, First Collateral Services, Concord, Calif.

The company has contacted investment bankers about selling the operation, said a source, but so far no official offering book has been circulated.

Citigroup did not make a public announcement on FCS but confirmed to Mortgage Servicing News that it will close the unit unless it finds a buyer.

"On Jan. 24, CitiMortgage announced the exit of its warehouse lending business through its subsidiary, First Collateral Services," it said. "Until the complete closure of the business, expected in 3Q this year, First Collateral will continue to support existing clients on a case-by-case basis in accordance with each client's contract and also work with clients on alternative solutions."

Among warehouse providers, FCS ranked about fifth, according to figures published in the Mortgage Industry Directory. Most of its clients ...